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Tech Shares Bounce Back
With Bargain Hunting

By

Katherine Meyer and

Jennifer Saranow The Wall Street Journal Online

Updated May 18, 2004 12:01 a.m. ET

NEW YORK -- Technology stocks rallied Tuesday as investors hunted for bargains following the recent selloff. Semiconductor stocks were strong ahead of earnings from
Applied Materials,
reported after the close.

The Nasdaq Composite Index rose 21.18, or 1.1%, to close at 1897.98. Meanwhile, Morgan Stanley's high-tech index added 5.69 to 449.28 and the Nasdaq 100 Index of nonfinancial stocks tacked on 17.57 to 1397.47.

Stocks opened higher Tuesday and remained in positive territory throughout trading as investors jumped in to seek deals following the market's tumble Monday. In that session, the Nasdaq composite finished at its lowest level since October as investors worried about the situation in Iraq, rising oil prices and the timing of a potential interest-rate increase.

Investors also had some new economic data to chew on Tuesday. The Commerce Department said Tuesday that housing starts slipped 2.1% in April as anxiety about higher interest rates began to weigh on the soaring construction sector.

In tech land, semiconductor stocks led the rally as investors bought shares ahead of the report from chip-equipment giant Applied Materials. Shares of Applied climbed 40 cents, or 2.2%, to $18.85. Other equipment companies on the rise included
KLA-Tencor,
up $1.03, or 2.4%, to $44.59, and
Lam Research,
up 78 cents, or 3.7%, to $22.15, all on Nasdaq.

The Philadelphia Stock Exchange Semiconductor Index, which includes both semiconductor and chip-equipment stocks, rose 8.42, or 1.9%, to 453.36.

Some makers of telecommunications gear also rallied after news of accounting woes at
Lucent Technologies
and
Nortel Networks
sent the sector tumbling Monday. Shares of Lucent gained 6 cents, or 1.9%, to $3.16, after falling 5.5% in the previous session, while
JDS Uniphase
added 5 cents, or 1.7%, to $3.03, partly recovering off a 4.5% drop Monday. Nortel shares, meanwhile, rose only 2 cents to $3.27.

In other news, shares of AT&T added 11 cents to $16.73 on the Big Board. The telecommunications company reached a five-year agreement to offer cellphone service using Sprint's wireless network. Shares of
Sprint
rose 47 cents, or 2.8%, to $17.58, also on the Big Board.

In earnings news, shares of
Computer Sciences
added $3.14, or 8.1%, to $42.17 on the Big Board. The information-technology services company said late Monday its profit rose 17% in its fiscal fourth quarter as revenue surged 30%, thanks to strong demand for its services from the federal government.

Shares of
Agilent Technologies,
however, slid 12 cents to $25.40 on the Big Board, even though the maker of test-and-measuring equipment reported late Monday a fiscal second-quarter profit, reversing a year earlier loss. Agilent cited double-digit orders growth across its business segments.

Shares of
Hewlett-Packard
gained 33 cents, or 1.7%, to $19.83 on the Big Board, ahead of its earnings report after the close Tuesday.

Micromuse
tumbled 82 cents, or 12%, to $6.01 on Nasdaq. The software company said in a filing with the Securities and Exchange Commission that it expects costs associated with the restatement of previous fiscal years to total $4 million to $5 million. Friedman Billings cut its rating on the stock to "market perform" from "outperform."

Amkor Technology
climbed 22 cents, or 2.4%, to $9.27 on Nasdaq after the company greed to pay about $145 million to acquire a manufacturing complex in Shanghai, China, currently leased by IBM. The provider of semiconductor packaging and test services also said it would acquire IBM's Singapore test operations.